Annis v. Butterfield

• Decision Date: 30 September 1904
• Citation: 99 Me. 181,58 A. 898
• Parties: ANNIS v. BUTTERFIELD et al.
• Court: Maine Supreme Court

58 A. 898

99 Me. 181

ANNIS

v. BUTTERFIELD et al.

Supreme Judicial Court of Maine.

Sept. 30, 1904.

(Official.)

Appeal from Supreme Judicial Court, Penobscot County; in Equity.

Bill by William A. Annis against Harry Butterfield and others to set aside a certain conveyance as fraudulent as to creditors. Dismissed on demurrer, and complainant appeals. Affirmed.

Argued before WISWELL, C. J., and SAVAGE, POWERS, PEABODY, and SPEAR, JJ.

P. H. Gillen and T. B. Towle, for plaintiff.

E. C. Ryder and Louis C. Stearns, for defendants.

SAVAGE, J. Bill in equity to set aside a conveyance fraudulent as to creditors. The case comes up on demurrer. The bill alleges that in 1891 Butterfield & Gates, copartners, owned in fee the real estate described in the bill, and in that year conveyed it to Eliza J. Gates, wife of the partner Gates, without any consideration moving from her; that in 1893 Butterfield & Gates became indebted to the plaintiff in the sum of $2,000; that in the summer of 1890 Mrs. Gates erected buildings on this real estate, of the value of $4,000, wholly out of money, labor, and materials furnished by the firm of Butterfield & Gates; that prior to and at the time of the conveyance to Mrs. Gates, the firm was in debt to various creditors, and that the conveyance was made in fraud of said creditors; that at the time of the erection of the buildings, as before stated, the firm was also indebted to the plaintiff and others, and put the labor, material, and money into the buildings in fraud of their creditors; that Mrs. Gates was conusant of the fraud of the firm; that on March 11, 1899, Butterfield & Gates were, individually and as copartners, adjudged bankrupts in the United States District Court, and a trustee was duly appointed; that on March 3, 1902, the trustee, for a valuable consideration, "sold and assigned to the complainant all the right, title, and interest which vested in him as trustee" to said premises, "together with any right to bring action, at law or in equity, to enforce any claim against said premises which was vested in said trustee in the interest of the creditors of said Butterfield & Gates." There is no allegation in the bill that the trustee ever mode any entry upon the real estate in question or had possession thereof, or took any steps to obtain possession, or to contest the title of Mrs. Gates, or that he ever made any election to avoid the fraudulent conveyance, unless the sale and assignment to the complainant was such an election. Nor does the bill allege that the plaintiff is in possession. The defendants filed a general demurrer, which was sustained, and the plaintiff appealed. For the purposes of the present case, the allegations of the bill must be taken as true.

In support of their demurrer, the defendants claim, first, that the plaintiff alleges no title to the real estate in himself. The allegation that the trustee in bankruptcy sold and assigned the property to the plaintiff, it is contended, is not sufficient. But this defect, if it be one, is easily amendable, and we proceed to the consideration of more important questions. The defendants further contend that by the sale and assignment, even though it be in the form of a deed, no right passed to the grantee which he can now enforce. They urge that it was the assignment of a mere naked right to bring an action to set aside the conveyance to Mrs. Gates on the ground of fraud, and that such a right of action is not assignable, and the assignment cannot be enforced, either at law or in equity. This proposition of law is not controverted by the plaintiff. It is conceded that if all that passed to the plaintiff was a mere right of action, the bill cannot be maintained. And such is the law. 2 Story's Equity (15th Ed.) 350; Prosser v. Edmunds, 1 Younge & Coll. 481; De Hogton v. Money, L. R. 2 Chan. App. 164; Brush v. Sweet, 38 Mich. 574.

But the plaintiff says that by its terms the assignment and conveyance was of more than the mere right of action—namely, that it was a conveyance of "all the right, title, and interest which vested in him as trustee of the estate of Butterfield & Gates" to the premises; and that this conveyance vested the title to the premises in the plaintiff, and gave him the right to maintain an action or bring a bill, whichever might be appropriate, to attack the previous conveyance to Mrs. Gates on the ground of fraud. If the trustee had a title that he could convey, and did convey, to the plaintiff, so that the estate vested in him, we think there is no doubt that the latter would have had the right to maintain proper proceedings to vindicate his title, and contest the fraudulent conveyance or not; and the plaintiff's position, in brief, is this: that this property was conveyed in fraud of creditors; that by the provisions of the United States bankruptcy act (Act July 1, 1898, c. 541, 30 Stat. 544 [U. S. Comp. St. 1901, p. 3418]), the title to all property conveyed by Butterfield & Gates in fraud of their creditors vested in the trustee by operation of law; that the trustee bad authority by law to sell it; that he did sell it to the plaintiff for a valuable consideration for the benefit of the estate; and therefore that the title to the real estate has come to the plaintiff, and that he is entitled to bring this bill to have the fraudulent conveyance set aside, and the cloud upon his title removed.

The United States statute referred to in section 70 (30 Stat. 565, 566 [U. S. Comp. St. 1901, pp. 3451, 3452]) provides:

"(a) The trustee of the estate of a bankrupt shall be vested by operation of law with the title of the bankrupt to * * * property transferred by him in fraud of his creditors.

"(b) Real and personal property shall, when practicable, be sold subject to the approval of the court.

"(c) The title to property of a bankrupt estate which has been sold as herein provided, shall be conveyed to the purchaser by the trustee. * * *

"(e) The trustee may avoid any transfer by a bankrupt of his property which any creditor of such bankrupt might have avoided, and may recover the property so transferred, or its value, from the person to whom it. was transferred, unless he was a bona fide holder for value, prior to the date of the adjudication. Such property may be recovered, or its value collected, from whoever may have received it, except a bona fide holder for value."

The defendants, however, contend that under these...